Running the numbers on backup generators

Whenever we have a power outage (which is not an infrequent occurrence in Hull) I ponder the utility of a backup generator. Since I’m currently sitting in the dark, I decided to run some numbers.

For simplicity, I’ll assume a reasonably-sized whole-house generator kit with a transfer switch that uses natural gas or LP. A decent price on one of these units is about $5,500, and I’ll assume another $1,500 for installation (both electrical and plumbing). Yearly maintenance contracts, which include an annual inspection and repairs, run around $300/year. The useful life of the generator is estimated by various sources at around 20 years.

Adding this up, we get a total lifetime cost of $13,000 for the unit, not counting fuel costs (which are a very small component if you’re using natural gas since there is nothing to store). That comes out to a yearly amortized cost of approximately $650. On average we have two lengthy power outages a year. So essentially, excluding fuel and unanticipated maintenance costs, the price is around $325 per outage.

That’s pretty significant. Although it no doubt feels worth it on the day when it’s 5 degrees F and the boiler is shut off due to lack of electricity…

Update (29 Feb 2016): Discussion about this post on Facebook revealed a few friends and acquaintances who were able to get a functional generator setup for far less than the estimates here. This is not surprising, because I was describing a “set it and forget it” approach. For completeness (and cost practicality), I should mention how they achieved this. Their setups typically included a smaller, manual start gasoline generator hooked up to a manual transfer switch that protected only a few key circuits. With no service contract and the willingness to go out in the storm to setup, start, and refuel the generator when needed, backup electrical capacity could be achieved for closer to $2,000-3,000.